Friday, March 19, 2021

Corporate Capitalism's Debt Machine Hides A Much More Insidious Reality

My upcoming post or possibly few series of posts will be an economic update. I noted in pretty substantial detail pre-coronavirus that the US economy was rolling over well before 2020.  The cat was recently let out of the bag in Congress that during 2019 and into 2020 the Federal Reserve was bailing out the banking system at a far greater rate than they publicly documented.  The secrets and fraud to keep our criminal banking system afloat are staggering.  On that note, there is a lot of nonsense and conspiracy reported out there on many popular financial sites.  I get all of my data directly from the Federal Reserve.  But since so much isn't reported by the Federal Reserve or anyone in the press, I use WallStreetOnParade.com pretty much exclusively to help me piece together that the Federal Reserve, Congress, the SEC or other regulators are misrepresenting or misleading us about.  Pam and Russ Martens have literally no equals in reporting on our financial system.  It's based in fact. They understand central banking, finance and monetary policy.  I get no money or have no affiliation on this blog. I don't even know Pam and Russ.  It's purely based on my indepth understanding of finance and their unique insight and journalistic excellence.  

I noted countless times post 2008 that the US would never see an economic recovery under the current economic system. And, that the world we knew before 2008 is gone. Forever.  The world is far different than anything that anyone will ever learn on Fox News, CNN, from Wall Street or from politicians. Over a lifetime, I have come to appreciate the palpable ignorance of the establishment.  It exists in science, in politics, in corporations, in the successful classes of corporate capitalism and in large segments of our population who rely on these sources.  This certainly doesn't mean people are stupid.  Far from it. Many of the most ignorant people are very bright by many measures. But if any narrative has become  mainstream, regardless of what ideology or doctrine, it is almost certainly fundamentally based on ignorance. And, the establishment elites arrogantly believe in their own ignorance regardless of any facts that may exist to the contrary. These are the effects of belief systems, or lies we tell ourselves, that I have written about incessantly. The ego will do anything to perpetuate its own belief systems. That includes look directly at an outright fallacy that is part of my belief system and rather than recognize my own ignorance, incorporate into my own faulty beliefs. This is why magical thinking and conspiracy theory abounds so much with White Americans and the professional class Americans being the two most predominant. They are the largest targeted population classes that suffer from a hive mind mentality that results in them lying to themselves so much they don't know who they truly are or what reality truly is.

As noted in prior posts, I'll be addressing all of this in detail in 2020 as these dynamics played a major role in my voluminous anticipated outcomes written of on here for the last sixteen years.  And, they are almost all in play or have already come to pass.  

We are never going back to the world that existed. And, never is a long time.  The revolutionary (the working poor and those most exploited by corporate capitalism) and counter-revolutionary (Trump supporters) forces that exist in our society are here to stay. Corporate capitalism is not and cannot mathematically recover.

For now, I want to simply highlight a topic discussed ad nauseam on here for sixteen years.  That is, US wealth creation peaked around 1980, capitalism can't pay its own bills, we don't live in a democracy but rather a corporate plantation and corporate captured government, capitalism is in systemic and likely permanent failure post 2008, I'm projecting US empire to end in 2022 and the US has spent hundreds of trillions of dollars (in today's dollar terms) bailing out corporate capitalism over the last four decades at the expense of democratic programs and the common good.

There were huge political and economic changes that happened in the last 70s and early 80s that I'll be discussing this year.  Those were generally driven by a radicalized fascist Republican Party and corporations.  As capitalism started losing its control and domination of democracy, it's strong adherents circled the wagons and started a multi-decades effort to destroy its democratic opposition.  One of the first of these efforts is the Lewis Powell memo I have mentioned numerous times on here; a blueprint for corporate capitalist to dominate democracy. (Link.)   (Powell was a radical right wing corporate fascist with incredibly undemocratic views that Nixon eventually nominated to the Supreme Court, which has been the most egregious violators of democracy and individual rights while legislating from the bench unconstitutional corporate laws.  If one does the research, they will find out this memo started the flood of dirty Republican corporate money that led to the endless wall of corporate money in politics, neoliberal trickle down economics of Reagan, right wing fascist think tank propaganda and resultant fascist changes in federal government policies and Federal Reserve policies. Both political parties in the US have long since adopted these stances.)  

One must realize that corporate capitalism is an economic control system just like communism, feudalism, mercantilism or any other ism dreamed up by the ruling economic-political class. And, that what is happening in the economy today was driven by inputs that may have happened a decade or a century ago. Constant rigging and handouts to corporate capitalism, Wall Street and the ruling class are ongoing in the endless bribing of government and stealing of wealth from the poorest and working class in our society. There is no such thing as the free market. There's only policy and handouts created by politicians at the behest of their corporate-investor class donors that transfer money from the working class, the poor and democracy to the corporate class.

I noted some posts ago about the many examples of the massive corporate capitalist bailouts over the last forty years that amounted to well north of $100 trillion. And, I haven't even scratched the surface with that post.  It's far greater than what I highlighted. In a similar vein, the Rand Corporation recently did an analysis that the top 1% of the corporate capitalist class stole $50 trillion dollars from the working class in the last forty years. Their analysis is completely different than my highlighted thefts but does intersect on some level. Their analysis is way too small.  The looting by corporate capitalism is far, far greater.

In the graph below, we see the total US corporate & economic debt versus GDP since 1975.  It's obvious that we aren't on a trend to ever pay back these debts. Ever.  And haven't been since Ronald Reagan replaced intrinsic demand from citizens with ever-increasing government spending and debt to prop up corporate capitalism, which required endlessly cutting democratic programs and social safety nets.   

What I want readers to take away from this graph has nothing to do with debt itself. It has to do with what's behind the debt that I have talked about repeatedly over the years. Debt is a myth. It's an illusion.  And, because US debt is all dollar denominated, we owe it to ourselves.  It doesn't matter if China holds our bonds or if a retired citizen in Detroit holds them.  (More on this later)  Debt is and can and be vanquished continuously around the world every day. 

What you should start thinking about is what would our economy have looked like without that buildup of corporate debt.  The simple answer is it would have collapsed alongside the Soviet Union, with similar timing.  Lenin told us communism was nothing more than state capitalism. And, in reality, they are extremely similar in how they are used to control the masses.  The US simply lasted longer because of its reserve currency status.  So, if we have had ever increasing debt for the past 40-odd years, that means what our economy has become during that time is completely unsustainable. Because, it obviously cannot repay its debts.  It also tells us the free market that Ronald Reagan and radical Republicans ushered in is nothing more than enslaving citizens to private corporations and debt that left society holding the bag on ever-increasing debt while the political and economic class pillaged democracy.  Mind you, this has been discussed time and again as a major driver behind the American Revolution in 1776 and our Declaration of Independence from the king's corporations and his corporate bankers.

The Federal Reserve can keep the debt Ponzi scheme going for a long time.  What it can't do is control the behavior of a global system with trillions of moving parts. It cannot control human behavior and it cannot cover over gross corporate capitalist incompetence forever.  

What this graph also points to is that corporate capitalism and Wall Street have grossly misallocated capital. That it has not served society or democracy but that corporations and ruling elites do just the opposite without democratic oversight.  They have allocated what served them best while leaving democracy in a debt-enslaved society where our only reason for existence is to service their entitlement. This chart alone shows you that corporate capitalism has plundered and looted society and left them with nearly a future $100 trillion dollar obligation in corporate debt alone. All while they deny Americans healthcare, living wages, the fruits of their labor and destroy their communities and democracy. This after receiving massive government subsidies that required cuts to democratic and social programs. This is why the wealth gap is so great. Because the top 10-20% have cashed out trillions while leaving the rest of society holding the bag on massive corporate debts.

This dynamic is why the government is now giving dollars to American citizens to survive. Because citizens have been looted and pillaged by corporate capitalism. But, even those checks are only enough to pay the corporate debts and endless bills that we are all enslaved to.  So, once again, these are backdoor handouts for corporations and banks that will receive nearly all of these payments to citizens.

So, what is behind this debt?  Massive physical global overcapacity and overconsumption. When you understand this, you appreciate the elephant in the room isn't debt. As noted ad nauseam, its the massive misallocation of capital by corporations (the mythical free market) in excess plant, equipment, consumption, retail, consumerism and the like that hasn't balanced with society's ability to intrinsically consume corporate capitalism's output for four decades. So, the biggest concern should not be debt but the physical imbalances behind it.  Because if those are taken out, then we will see massive global unemployment. Massive. As noted many times, it could be upwards of 70% in the US.  A few sources who calculate real unemployment recently put total unemployment in 2020 at nearly 50% during the height of the pandemic.  That has again fallen to around 25% but the pandemic exposed the risks to the system when shocks are absorbed.

And, the debt bubble isn't just a US phenomenon.  The US has saddled China with even more debt as it has plundered that country. China's total government, corporate and private debt is now over 400% of GDP.  The US has pillaged China and left it in a disastrous situation as noted countless times on here.  

This is almost certainly the final days of corporate capitalism.  Whether it fails in one fell swoop or slowly grinds its way to nonexistence through a series of continual shocks remains to be seen.  

Until the next time. (You can click on the graph for a larger image.)

posted by TimingLogic at 5:05 PM